Not all financial professionals are insurance experts. Even if you don’t consider yourself a specialist in insurance, it doesn’t mean you can’t help your clients identify risk coverage gaps that may lead to vast future financial exposure.

Let’s take a look at some high-level review items.

General

Make sure your clients are covered against the range of life’s risks. Among the policies almost every client should have are long-term disability, life, health, homeowner’s or renter’s, auto and an umbrella policy to cover personal liability.

Examine the deductibles your clients have on their various policies (e.g., auto, health and homeowner’s). Higher deductibles can save on annual premiums since it is a form of self-insurance. Engage your client in a conversation about the relative trade-offs of higher deductibles and cost savings versus the benefit of the lower financial risk of an insurance event.

Life Insurance

The most important consideration is whether the coverage amount is sufficient. That means asking about big life changes, like a new child, a jump in earnings or the assumption of new debt (e.g., the purchase of a bigger home or second home).

The form of life insurance coverage is important, as well. Term insurance is very cost effective, but may become problematic as individuals age and health conditions change. Consider transitioning to a permanent policy when a client is in his or her early 40s while an individual’s health is still good.

Homeowner’s Insurance

With the advent of greater risks due to climate change, review whether a current policy protects against flooding, windstorms and hail. Also review whether your client has sufficient coverage for jewelry, fine art and other expensive items that may exceed the standard coverage amounts.

Auto Insurance

If your client has a teenager who uses the car for a side hustle or pizza delivery, make sure the insurance company will cover accidents that occur during such use.

Disability Insurance

The most important thing to check for is if the policy is “own occupation,” which pays if a disability prevents the insured from working a similar job, as opposed to “any occupation,” which won’t pay benefits if the insured can perform any job.

If your client has significant student loan debt, consider a rider that pays such debt since the ability to forego student loan payments due to disability is no longer available.

An insurance review for clients can be conducted once a year in conjunction with an annual financial plan review or a quarterly investment performance review, with the objective of connecting them with an insurance professional to review your findings.

Please reference disclosures at: https://blog.americanportfolios.com/disclosures/